Mar 31, 1987


GENEVA MARCH 28 (IFDA/CHAKRAVARTHI RAGHAVAN) -- The Group of 77 has strongly criticised the industrialised countries over their attempts to shift the focus of discussions on protectionism and structural adjustment, "away from trade policy issues to the autonomous development policies of developing countries".

This criticism was voiced by Ajit Seth of India, speaking for the Group of 77 in the Trade and Development Board's Sessional Committee which has been discussing issues of protectionism and structural adjustment.

Seth placed the criticism in the context of the "continued and extremely unfavourable" world economic environment facing third world countries.

Speaking for the OECD Group in the Committee, Timothy Groser of New Zealand sought to pain an upbeat view of the world economic prospects, though qualifying it by speaking of the elements of "opportunity, uncertainty and risk" in the General Environment for International Trade.

Groser said "it is expected that the present recovery will continue into its sixth year, and the prospects for world trade in both manufactures and non-energy raw materials should thus improve from the rather flat rates of growth in volume experienced at the end of last year".

This optimistic view however runs counter to the consensus view among international organisations and private economic analysts that the world economy is "in a precarious situation", as the chief economist for UN's Economic Commission for Europe has put it.

Earlier this week both GATT and the ECE have warned that the outlook is now worse than envisaged in year-end December forecasts. GATT has also estimated trade in 1987 will grow at only 2-1/2 percent in volume, a full percentage point lower than in earlier two years.

The G77 spokesman said UNCTAD Board's Annual review of protectionism and structural adjustment, and implementation of standstill and rollback commitments, should be made more effective by addressing specific sectors, rather than the current general discussions.

This was all the more necessary since protectionist measures had intensified in sectors of crucial importance to the third world -agriculture, steel, textiles and clothing, leather and footwear, petrochemicals and consumer electronics.

The exogenous factors responsible for much of the recent macro-economic disequilibrium in the third world, at a time when third world countries were coping with external indebtedness, made the situation more difficult for them.

It was incongruous for third world countries to strive for better trade balance when increasingly industrial countries restricted access to markets through new and increasingly sophisticated protectionist measures against suppliers from the third world.

There was continued and growing resistance to structural change and increased rigidity in some major countries, and these explained "the pressing difficulties in the international trading system".

Also, macro and micro-economic policies of industrialised countries had not always been mutually supportive in facilitating adaptations of economies to structural change-

The Indian delegate said the most serious development for the third world countries was the increasing tendency on the part of certain industrialised countries to seek linkages between continued availability of access to their markets to the third world countries opening up of their markets for foreign direct investment, and linking trade in goods to other matters such as protection of intellectual property, services and fair labour standards.

"Attempts to establish such a nexus would clearly not be acceptable to the developing countries", Seth declared.

The industrialised Contracting Parties in GATT had undertaken standstill and rollback commitments over the Uruguay Round, but it remained to be seen how far these would be observed, since recent developments in at least one of the major trading nations (the USA) gave some cause for concern, Seth said.

Criticising the OECD countries for trying to keep the discussions "general in nature", and focusing on third world domestic policies, the G77 spokesman added:

"We do not see how it would help to pay attention in the committee to the role of domestic policy when it is evident that the major cause of the problem faced by developing countries is the set of exogenous factors. Indeed the group of 77 is concerned at the attempts being made to shift the focus away from trade policy issues to the autonomous development policies of developing countries".

Groser said his group of countries were determined to do their utmost to support the Uruguay Round and ensure freer market access and reduction of distortions to trade.

All countries had a stake in the successful completion of the round as it sought to spread economic benefits of internationalization of production and development of new technologies to as many countries as possible.

Potential beneficiaries would also be the third world countries, who would be able to play an active part in the liberalization process, with all countries expected to contribute in a manner commensurate with their stage of economic development.

The spokesman for the socialist group of countries, Laslo Varkonyi of Hungary said that despite previous hopes and expectations there was "continuing deterioration of the international trading environment".

The past commitments for standstill and rollback had now received a new endorsement in the Uruguay Round Ministerial Declaration.

"My group sincerely hope that this undertaking will not serve as it was the case in the past - only reference purposes, but is rather the manifestation of a real and concerted political will ... the answer lies now in the implementation of that commitment, and in that respect the special responsibility of the major trading nations should be stressed".

In the socialist view, it was not the trading system as such that was responsible for the present situation "but rather the behaviour of some major trading nations which, led solely by their domestic policy objectives, endeavour to ignore their contractual obligations".

"Any attempts at creating different sets of specific rules instead of the universal application of already agreed guiding principles of international trade would only increase the compartmentalization of the system and lead finally to the total disruption of the multilaterally agreed frameworks for conducting international trade".